The Fed will use “all our tools” to ensure the safety of the banking system
Federal Reserve Chairman Jerome Powell said at Wednesday’s press conference that the Fed would use “all of our tools” to keep the banking system safe following the collapse of Silicon Valley Bank (SVB ) at the beginning of the month.
“Our banking system is strong and resilient, with strong capital and liquidity. We will continue to closely monitor conditions in the banking system and stand ready to use all of our tools as needed to keep it safe and sound,” Powell said.
Federal Reserve Chairman Jerome Powell speaks during a House Financial Services Committee hearing to consider the semi-annual report on monetary policy to Congress, Wednesday, March 8, 2023, on Capitol Hill in Washington. (AP Photo/Jose Luis Magana)
“We are committed to learning from this episode and working to prevent episodes of events like this from happening again,” Powell added.
The Federal Reserve Chairman was referring to the collapse of SVB earlier this month when panicked customers suddenly pulled out tens of billions of dollars after announcing a loss of about $1.8 billion from the sale of its investments in U.S. Treasuries and mortgage-backed securities.
Security guards let individuals into the headquarters of Silicon Valley Bank in Santa Clara, Calif., on Monday, March 13, 2023. (AP Photo/ Benjamin Fanjoy)
Ultimately, regulators close down the bank, and the FDIC took control. It was later said that the government, like the Fed, the Federal Deposit Insurance Corporation (FDIC), and the US Treasury, protect all depositors, even those who have exceeded the FDIC’s $250,000 limit.
SVB reopened early last week as Silicon Valley Bridge Bank, NA, under FDIC supervision. The insured and uninsured had all assets transferred to the bridge bank. The bridge bank gives the agency time to stabilize the institution and market the franchise. Until further notice, the bridge bank will continue to operate as a nationally chartered bank, so depositors will have full access to all their money.
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Later in the press conference, Powell acknowledged that problems in the banking system would create tighter credit conditions for the time being and compared banking problems to further rate hikes.
“However, we believe that events in the banking system over the past two weeks are likely to lead to tighter credit conditions for households and businesses, which in turn will affect economic outcomes,” he said. he declares. “It is too early to determine the magnitude of these effects, and therefore too early to determine how monetary policy should respond.”
Before the press conference, the Fed raised interest rates by a quarter of a percent (25 basis points).
Jacob Bliss is a reporter for Breitbart News. Write to him at jbliss@breitbart.com or follow him on Twitter @JacobMBliss.
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